Will Equities continue the March to year end

The Equities have been out performing the other markets in last 3 months and have taken many aback. The Left outs have been sort of blaming on ' Liquidity Tap' in US and European Banks and faulting markets for playing this ' CLiff Hanger'.
While, Commodities and particularly Oil has fully recovered the ' Paralysis ' Much faster than thought by any one. Gold and Silver not falling in sympathy, While ' Equities' running ' blind Fold' action. The USD still remains a suspect. And, lastly bonds in US and Europe are ' dead wood'
Indian markets struggling from the brink and remains as suspect.

Will this ' contrariness ' sustain itself..? Many think Yes and more think and lurk on the background to enter.
However, the discipline investor should wait for the last episode of this Play and keep waiting for the next day till .. Markets scale a new peak. Markets are going up for end of ' selling ' season in June and likely to test the virtue of being patient But, the upcoming FOMC meeting shall be the end of the ' Game of Waiting' and shall be the decider. 

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Fidelity India Fact sheet for December 2011

Fidelity equity fact sheet_december2011

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Stock Sweetness and bitter pill

The Equity markets world over sprung after long long time, looking past European Crisis and China's slowdown and carrying the US growth prospects in both Hands. Markets like an efficient animal smell the growth and like a bad engineer spoil it with huge Margin in the downside and Upside. The swings are really breath taking and wild.


Unlike, in 70s to early this century commodities hardly tracked and coyed the equities. But, with the continuous Money injections and abetting by the US FED the co relation seems to be getting entrenched and creating trading pattern. The Equity-commodity unison seems to be obvious and reasonable and most importantly acting as proxies for various currencies like Canadian $, US $, Euro and lately developing world and special reference to Asian Currencies. The Cocktail tastes good and healthy now, and it seems the indicators have started showing divergences and likely to break sooner than ever. The Early indicator seems to be Gold..


Next question lies Who will loose and break the tempo and momentum...?

Reserve Bank of India's Monetary Review - 2011-12

Macroeconomic and Monetary Developments: Third Quarter Review 2011-12 The Reserve Bank of India today released the Macroeconomic and Monetary Developments Third Quarter Review 2011-12. The document serves as a backdrop to the Monetary Policy Statement to be announced on January 24, 2012. Highlights:   Overall Outlook While growth outlook weakens, inflation risks remain The Growth outlook has weakened as a result of adverse global and domestic factors. However, inflation and expectations of inflation remain high and upside risks emanate from exchange rate pass-through, revisions in administered prices and higher-than-expected government revenue spending. Consequently, monetary actions will need to strike a balance between risks to growth and inflation. Growth in 2011-12 is moderating more than was expected earlier. The business climate has weakened. The slack in investment and net external demand may keep the pace of recovery slow in 2012-13. While in the short run, moderating inflation will provide some space for monetary policy to address growth concerns, in the absence of structural measures to address supply bottlenecks, this will be, at best, a temporary respite. In addition, the expansionary fiscal stance has emerged as an upside risk to inflation. Global Economic Conditions Global growth moderates, financial market stress rises The global economy seems to be headed for another downturn after just three years. The recovery is likely to lose traction due to the continuing euro area debt crisis. As fiscal austerity progresses, the euro area could enter into a recession. With growth decelerating even in emerging and developing economies (EDEs), the spillovers from euro area are likely to pull down global growth. An adverse feedback loop between bank and sovereign debt brought euro area closer to contagion across the region. Tightening credit conditions, rising risk premia, deleveraging, weakening growth in the euro area are keeping global financial markets under stress. Going forward, further softening in commodity prices on the back of weaker global growth is likely in 2012-13. However, upside risks to the oil price remain, including from recent geo-political uncertainty. Indian Economy Output Global linkages reinforce domestic factors to slow down economy Agricultural prospects remain encouraging but moderation is visible in industrial activity and some services. Industrial slack has emerged as export and domestic demand has decelerated. A strong co-movement between domestic and global IIP series is observed. The RBI survey shows significant growth in new orders for some industries, but flat capacity utilisation in Q2 of 2011-12. Growth in 2011-12 is likely to moderate to below trend given the external conditions, dampened investment demand and prevailing high level of inflation. Growth outlook will depend on global conditions and domestic policy reforms Aggregate Demand External and investment demand may drag growth Growth has been impacted by lower external and investment demand which may also act as a drag during 2012-13. There has been a sharp decline in planned corporate fixed investment since H2 of 2010-11 and this trend has accentuated further in Q2 of 2011-12. Private consumption continues to moderate. There has been some slackening of corporate sales growth, reflecting a gradual waning of demand. Available early results for Q3 of 2011-12, however, indicate healthy sales growth. The central government’s deficit indicators are under duress due to higher subsidies and lower tax collections. Fiscal slippages during 2011-12 may complicate the task of aggregate demand management. Fiscal reforms, including the Direct Tax Code and the Goods and Services Tax are, therefore, needed to contain deficits in 2012-13. With a widening current account deficit (CAD), larger fiscal spending could affect growth and stability in the economy. The mounting revenue deficit is already putting fiscal position under strain and impacting the Government’s ability for capital spending. There is need for budgetary solutions to growing subsidy commitments and to rebalance public spending from consumption to investment, in order to enhance the potential growth rate of the economy. External Sector CAD risks have amplified as capital flows moderate Early indicators suggest that the current account came under increased pressure during Q3 of 2011-12. Notwithstanding rupee depreciation, exports decelerated but import demand remained strong, with inelastic demand for oil and rising gold imports. Upward risks to CAD have become more pronounced with likely moderation of software earnings. As capital flows also moderated since August 2011, financing pressure on the CAD translated into exchange rate pressures. Currencies of other EDEs running CAD came under similar pressures. Following the revival of equity flows in January 2012, exchange rate pressures have reduced somewhat. The composition of capital inflows has shifted in favour of debt, with a rise in the proportion of short-term flows. Vulnerability indicators have weakened moderately, though the net international investment position has improved. Going forward, there is need to reduce dependence on debt flows by encouraging renewed equity flows through acceleration of  policy reforms aimed at improving the investment climate Monetary and Liquidity Conditions Monetary growth keeps pace even as money market liquidity tightens Money market liquidity tightened   significantly   since   November 2011 partly due to dollar sales by RBI. However, monetary growth has kept pace with projections, on account of a rising money multiplier. The liquidity stress was handled by the Reserve Bank by injecting liquidity through open market operations, including repos under the LAF. Credit growth slowed below the indicative projection due to demand as well as supply side factors. Demand for credit weakened in response to slack in real   activity. Supply also slowed down with rising risk aversion stemming from deteriorating macroeconomic conditions and rising non-performing loans. Monetary policy has been significantly tightened since February 2010 with an effective increase of 525 bps in policy rates and a 100 bps increase in CRR. Factoring in increased downside risks to growth and the expected moderation in inflation, the policy rate was kept on hold in December 2011. The trajectory of the monetary cycle ahead will be shaped by the evolving growth-inflation dynamics. Financial Markets Financial markets come under pressure from global spillovers Global spillovers and macroeconomic deterioration resulted in pressures on the equity and currency markets. The sharp depreciation of the rupee during August-December 2011 contributed to a drop in foreign equity inflows which in turn, further weakened the rupee. The sudden stop in equity inflows also impacted investment financing. The impact was compounded by poor resource mobilisation in the primary capital market. The stress in the financial markets was mitigated by policy measures that included infusion of rupee and dollar liquidity. As a result, the rupee exchange rate appreciated and equity markets recovered in January 2012.  Call money rates have largely remained within the interest rate corridor and spikes were effectively contained. Price Situation Inflation is trending down, but upside risks remains significant Inflation is moderating led by sharp decline in food inflation and is broadly in line with the 7 per cent projection for March 2012. Primary food inflation declined sharply reflecting seasonal fall in vegetable prices and high base. However, as protein inflation continues due to structural demand-supply imbalances, the decline is expected to be short-lived. Inflation in non-food manufactured products remains persistently high, reflecting input cost pressures, partly resulting from the rupee depreciation that has offset the impact of softer global prices of some commodities. Upside risks to inflation persist from insufficient supply responses, exchange rate pass-through, suppressed inflation and an expansionary fiscal stance. Alpana Killawala Chief General Manager Press Release : 2011-2012/1180

Reliance Industries Press Release

Reliance Press Release is shared here for the Investor's to see themselves the most valuable Indian Company. It seems that Mr Mukesh Ambani has taken keen interest in many other sectors like 4G, retails, infra development and so on.
It is unfortunate that Reliance Industry has kept itself moving away from Oil and Gas Exploration and Refining sector. Absurd, as Mr Ambani is himself An expert Engineer but the Hostile Governmental Policies possibly have put the breaks on this sector.

Indian Government cashes on Gold Rush

The Phenomenal rise in Gold Price and its entry as a Investment Vehicle in the Last decade attracted many towards the precious metal. The Gold ETF's across the India became flavour and favour. Inspite, this rise the Indian Gold demand remain inelastic and more so Price Inefficient. In Mid 60s till mid 90s Gold remained as the Smuggler's Favourite and M/s Hajji Mastan and Co made a Huge moral victory by smuggling gold over drugs.
Mr Yashwant Sinha then finance Minister lowered the custom duty on Gold. 2001-2002:"In order to discourage smuggling I propose to reduce the duty on gold from Rs 400 per 10 grams to Rs 250 per 10 grams."- Yashwant Sinha.
Well, then Gold was trading at much Lower Price @ $ 300 per Ounce and RS 6000 about in Indian Currency .

The Call of Duty

In a bid to match the import duty with rising prices, the government trebled the customs duty on import of gold by increasing the duty twice by Rs. 100 each time, during the Fiscal Year 2009-10.

On 17^th January 2012 the government again changed the import duty and it has been set at 2% of value from the earlier import duty of flat Rs 300 per 10 grams. This means, at current price of Rs. 27,700 (rounded-off current gold price) for 10 grams of gold, while you used to pay Rs. 300 as customs duty, it will now increase to Rs.560 (approximately) per 10 grams. In other words, customs duty which amounted to 1.08% at current prices has increased to 2% of value; nearly double of the tariff.

What made the government raise the import duty on gold again? Here are a few probable reasons...

One, India is the world's largest consumer of gold and most of the gold demand is satisfied through imports. As consumption of gold increased, the value of gold imports also saw a rise. We know that higher imports require higher foreign exchange to pay for the import bill, causing a strain on the country's trade balances. Higher imports and rising gold prices worsened the rising trade deficit issue. As per December 2011 data, gold and silver imports grew at 53.8% to $45.5 billion.

Is Gold an Investment for Indians..?

Traditionally, Yes and quite wisely Gold is called Woman's Wealth ( Stree Dhan ). Its exchangeable and posses highest liquidity otherwise remains static in Value. Surely, No one has ever called it as trader's paradise.  

Does it make economic sense..

I think Gold at this price of Rs 27000/ looks tad costly but at Rs 20000 sure is a Buy.